Accavallo & Company, LLC

Secure Your Nonprofit by Safeguarding Volunteers from Legal and Tax Risks

As a leading tax firm specializing in nonprofit organizations, we understand the critical importance of comprehensive risk management for not-for-profit leaders. While you diligently protect your facilities, assets, staff, and clients, have you considered the potential legal and tax liabilities facing your volunteers? Despite the protections offered by the federal Volunteer Protection Act of 1997, volunteers remain vulnerable to lawsuits and tax implications stemming from their actions while serving your organization.

State-specific Considerations

While the Volunteer Protection Act provides a baseline of defense, it’s essential to recognize that liability laws can vary significantly from state to state. Each state may impose different limits, conditions, and exceptions, necessitating a tailored approach to risk management. Some states offer broad coverage, while others require nonprofits to expressly assume liability in their articles of incorporation. Therefore, it’s imperative to stay informed about the legal landscape in your jurisdiction.

 Insurance Solutions

To mitigate risk effectively, your nonprofit should invest in comprehensive insurance coverage. This includes general liability insurance specifically tailored to cover volunteers, as well as directors and officers liability insurance. If volunteers operate vehicles on behalf of your organization, it’s crucial to verify whether your auto insurance extends coverage to them. Moreover, larger organizations may consider amending their bylaws to include a robust indemnification clause for volunteers, especially when claims exceed insurance limits.

Proactive Risk Management

In addition to insurance, proactive risk management strategies can further safeguard your organization and its volunteers. Implementing thorough screening and training processes for volunteers helps mitigate the risks of harm or injury. Certain client-facing activities should be restricted to paid staff members to minimize liability exposure. By investing time upfront in vetting and preparing volunteers, you not only protect your organization but also enhance the overall volunteer experience.

Tax Compliance Awareness

Beyond legal liabilities, nonprofits must also be mindful of potential tax implications for volunteers. Providing benefits or compensation beyond reimbursement for actual expenses can inadvertently create taxable income for volunteers. It’s essential to educate volunteers about the tax implications of reimbursements exceeding actual expenses and ensure transparent documentation of expenses incurred on behalf of the organization.

Consultation and Collaboration

Navigating the complexities of volunteer risk management requires ongoing collaboration and consultation with legal professionals. Particularly for nonprofits providing medical services or working with vulnerable populations, the stakes are higher, and proactive legal counsel is invaluable. By prioritizing the protection of volunteers and the organization’s mission, you ensure a safer and more sustainable future for all stakeholders.

At Accavallo & Company, we’re committed to empowering nonprofits with the knowledge and resources needed to navigate legal and tax complexities effectively. Contact us today to learn more about our specialized services tailored to your organization’s unique needs. Together, we can strengthen your risk management practices and safeguard your nonprofit’s mission for years to come.

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Sherri Fisher is a Tax Manager at Accavallo & Company, LLC.  Sherri has longstanding expertise in Trust and Estate Taxation, Eldercare, and Estate planning. Sherri appreciates the relationships she has built with estate planning attorneys and advisors, to provide a team approach to assisting her clients. Sherri also has seasoned experience in business and individual taxation and is partial to assisting start-ups in developing overall accounting and operating plans.

Prior to joining Accavallo & Company, LLC, Sherri was a manager in a large firm, servicing high net worth trust clients, business, and personal clients. She was also a Partner in a large bookkeeping firm, which specialized in cloud accounting systems for regional and national companies. Sherri led a team in assisting clients to organize their accounting systems.  She is a graduate of Florida Atlantic University with a B.S. degree in Accounting.    

Sherri’s experience includes working with companies and organizations in a variety of industries including:

  • Investment Trusts

  • DAPT and Family Investment Partnerships

  • Estate and Probate Administration

  • E-Commerce

  • Manufacturing

  • Construction

  • Real Estate Investment

  • Marketing and Service-based industries

In addition to her professional accomplishments, Sherri is an Intuit Advanced Pro Advisor, Intuit Future Firm Advisory Board member, member of the Valley WIN Network, and proudly served as past Connecticut Public School liaison for the Yale Tommy Fund for Childhood Cancer. Sherri enjoys time with her family, Cleveland sports, thrifting and gardening.